Special Report
America’s Most Hated Companies
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To be truly hated, a company must alienate a large number of people. It may irritate consumers with bad customer service, upset employees by paying low wages, and disappoint Wall Street with underwhelming returns. For a small number of companies, such failures are intertwined. These companies managed to antagonize more than just one group and have become widely disliked.
The most hated companies have millions of customers. With such a large customer base, it is critical to keep employees happy in order to promote high-quality customer service. Poor job satisfaction among employees can lead to unsatisfied customers. McDonald’s and Walmart have risked alienating workers, and therefore also customers, by not adequately addressing protests against their employees’ low wages. While pay may be low enough to put some workers below the poverty line, executives at these companies often make millions. The total compensation of McDonald’s CEO Donald Thompson, for example, was nearly $9.5 million in 2013 and nearly $13.8 million in 2012.
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Layoffs, or even the prospect of layoffs, can also contribute to low employee morale. Sprint announced it would cut 2,000 jobs late last year. Workers at Comcast can reasonably expect layoffs should its planned merger with Time Warner Cable receives government approval.
Many of the most hated companies angered the public because of quality issues with their products.. Comcast has long been one of the worst companies in America in terms of customer service and satisfaction. Another example is the General Motors recall scandal. GM announced a recall in early 2014 due to faulty ignition switches in a number of its cars, now believed to have cost 42 people their lives. The company’s problems were compounded by the realization that it had known about the defect for over a decade.
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Nothing harms the long-term reputation of a company in the eyes of investors more than a steep drop in its share price. In the past 12 months, shares of Sprint have fallen by more than 50%, as hopes for a tie-up with rival T-Mobile were dashed while the company had little success in retaining customers.
It is worth noting that some of the companies on the list may have performed very poorly by some measures but relatively well by others. A few of the most hated companies have had good stock performances. Others have relatively satisfied customers. All of these factors were taken into account in compiling the final list.
Several companies from last year list have improved their public perceptions enough to be removed from this year’s list. For example, J.C. Penney is in the midst of a modest turnaround. Abercrombie & Fitch’s controversial long-time CEO Michael Jeffries resigned last December. However, the retailer still has problems attracting teenage customers.
To identify the most hated companies in America, 24/7 Wall St. reviewed a variety of metrics on customer service, employee satisfaction, and share price performance. We considered consumer surveys from a number of sources, including the American Customer Satisfaction Index (ACSI) and Zogby Analytics. We also included employee satisfaction based on worker opinion scores recorded by Glassdoor.com. Finally, we reviewed management decisions and company policies that hurt a company’s public perception.
These are America’s most hated companies.
1. General Motors Company (NYSE: GM)
General Motors spent much of 2014 on the defensive, as it had to deal with a number of serious recalls. In the most serious incident, the company disclosed an ignition switch defect that could cause a vehicle’s engine to stall and its airbags to fail while it was in motion. The defect triggered the recall of 2.6 million cars and has been linked to 42 deaths. The company reported it had recalled a total of 34 million cars for a number of defects and incurred more than $2.7 billion in recall-related costs in the first nine months of 2014.
The public fallout from this recall was enormous. GM set aside $400 million to cover damage claims for victims of the faulty ignition switches, while the U.S. Department of Transportation fined the company $35 million — the most it legally could. Even worse, GM employees had known about the defect as early as 2001. Reuters uncovered last April that the company avoided fixing the problem in 2005, despite the fact that replacement switches would have cost just 90 cents each. During the fallout, CEO Mary Barra told Congress, “I never want anyone associated with GM to forget what happened. I want this terrible experience permanently etched in our collective memories. This isn’t just another business challenge.”
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2. Sony Corp (NYSE: SNE)
Sony had perhaps the most difficult holiday season of any company. News broke in November that the company’s film division, Sony Pictures Entertainment, had been hacked in response to one of its upcoming films, “The Interview.” The hackers, reportedly from North Korea, were offended by the movie’s portrayal of North Korea and its dictator Kim Jong-un. Among other information, the hackers leaked unreleased Sony movies, executive salary data, and personal email correspondence between major Hollywood figures. A number of these emails revealed petty disputes and derogatory comments about race from top figures at the company.
After being hacked — and after a number of major theaters said they would not show the movie — Sony initially decided not to release the film. However, it later reversed course, prodded by criticism from, among others, President Barack Obama. In addition to the debacle surrounding “The Interview,” Sony’s PlayStation Network was also hacked during the holiday season.
Sony’s problems have not been limited to hacking attacks. Sony has regularly reported annual losses for years, and restructuring announcements have become an almost annual event. So far, however, years of expensive restructuring initiatives have been unfruitful. The company’s smartphone division has also taken a hit, with Sony’s smartphones losing market share while failing to sell profitably. Sony shares trading on the New York Stock Exchange have declined more than 30% in the past five years, even as American and Japanese stocks have rallied significantly, with the S&P 500 up approximately 80% in that time.
3. DISH Network Corp (NASDAQ: DISH)
More than 20% of respondents on the Zogby Analytics survey rated DISH Network poorly, one of the highest percentages of any company reviewed. Also, DISH Network has fared worse than most companies on the ACSI in recent years, albeit in an industry that largely received extremely low ratings.
In the wake of heated and ongoing contract negotiations between DISH Network and Fox, DISH customers can no longer watch Fox News or business channels. The blackout has likely had a negative impact on DISH’s customer satisfaction, at least among Fox News viewers who subscribe to DISH. This is hardly the first carriage dispute for DISH in recent years. Other such disputes resulted in long blackouts of AMC Networks and Turner Networks, as well as a brief outage of CBS-owned channels.
Customers are not the company’s only critics. Past and present DISH employees gave the company an average score of just 2.7 out of 5 on Glassdoor.com, with employees frequently disapproving of upper management.
4. McDonald’s Corporation (NYSE: MCD)
Low wages are a major flashpoint for McDonald’s, with many workers arguing they deserve better pay. Pay at the company is generally quite low, with the average crew member reporting wages of $8.25 an hour, and the average cashier reporting wages of $8.41 an hour.
Fast-food workers protested against low wages at the end of 2013. Protests specifically aimed at McDonald’s wage practices continued into 2014. Notably, employees and labor advocates protested outside McDonald’s Oak Brook, Illinois campus during its annual shareholder meeting.
The company’s labor issues may increase after the National Labor Relation Board’s (NLRB) recent ruling that the company is a joint employer alongside its franchisees. In effect, this ruling means that the company is liable for labor violations at its franchisees’ restaurants.
Apart from labor issues, the company has struggled to appeal to customers in recent years. No fast-food company received a lower customer satisfaction score in 2014, according to the ACSI. McDonald’s has also had to deal with a major drop in sales, with four straight quarters of same-store sales declines in the United States. McDonald’s has announced plans to simplify its menu to help stem the decline.
5. Bank of America Corporation (NYSE: BAC)
Fair or not, Bank of America remains deeply unpopular. The banking giant received an ACSI score of just 69, well below the industry average of 76, and an indicator that customers are highly unsatisfied with the bank. Worse still, the company received the highest share of poor reviews of any business in Zogby Analytics’ 2014 customer service survey.
Its inability to satisfy customers is not the bank’s only problem. After the bank discovered an accounting error in April, the Federal Reserve forced it to suspend both its share buyback program and its planned dividend increase. The bank also reached an agreement with the Justice Department to pay a record $16.65 billion settlement related to its mortgage practices leading up to the financial crisis. This was just the latest in a series of multi-billion dollar mortgage-related fines the bank has paid in recent years.
Bank of America’s share price has been effectively flat over the last five years, even as the S&P 500 has risen by almost 80%.
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6. Uber
Fast-growing Uber, an app-based car service, was one of the most talked-about companies in 2014. Some of the coverage surrounding Uber focused on the company’s growing popularity and heady valuation. However, few companies have engendered as much controversy as Uber has.
In some cases, outrage has come from established cab drivers. Uber has regularly encountered opposition from regulators in the U.S. and Europe. Regulators in a number of U.S. cities, as well as France, Netherlands, and China have banned or challenged the legality of the company’s ride-sharing offerings, which allow anyone with a car to work as a driver. The company also suspended operations in Spain following similar opposition.
Even Uber drivers have protested the company’s policies, including fare cuts aimed at improving its ability to compete with established cab companies and other startups, such as rival Lyft. Customers, too, have complained about Uber, especially the practice of “surge pricing,” which involves raising fares when demand for rides is particularly high. Some critics have compared decried the practice as price gouging, and New York’s City Council is currently considering a cap on fares.
The company also came under fire for the actions of several executives. Last November, one executive told a BuzzFeed reporter he had been tracking her car — without consent — as she arrived to interview him. That same month, another executive suggested to a BuzzFeed editor that Uber should consider digging up personal information about members of the media critical of the company.
7. Sprint Corp (NYSE: S)
Sprint has been disappointing many customers for years. In the six quarters through September 2014, Sprint lost nearly 2.6 million postpaid subscribers — customers who have a phone contract and typically are more lucrative for the company. This marked the 11th straight quarter of net decline in subscribers. As a result, many employees lost their jobs, as Sprint eliminated some 2,000 jobs in an effort to cut costs.
One reason that customers may be willing to jump ship from Sprint may be dissatisfaction with its customer service. Nearly 21% of Sprint customers reported a poor experience to Zogby Analytics, the worst rating among cellular carriers and a higher percentage than of all but three other companies reviewed in any industry.
In 2013, Japanese telecommunication company SoftBank purchased a majority stake in Sprint for $22 billion. SoftBank wanted to merge Sprint with T-Mobile US but called off the plan after it became clear U.S. regulators would oppose any tie-up. Investors cannot be happy — shares of Sprint have fallen by half in the 12 months.
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8. Spirit Airlines Incorporated (NASDAQ: SAVE)
Spirit Airlines offers a remarkably unpleasant experience in an industry already known for long lines, invasive security screens, hidden fees, lost possessions, and delays. Services and amenities that are bundled into a ticket’s price on most airlines are sold separately on Spirit, which charges for putting a bag in the overhead compartment or for bottled water. Yet, according to a 2014 report by Bloomberg Businessweek, “Despite the prevalence of fees, Spirit says its total price is still lowest, at $102.02 on a length-adjusted basis, compared to $125.65 at Southwest and $152.97 at Delta.”
Many Spirit customers appear to be willing to sacrifice a bit as far as quality goes in order to fly at a better price. Still, in a 2013 study on the airline industry, Consumer Reports wrote that “bottom-ranked Spirit Airlines received one of the lowest overall scores for any company we’ve ever rated.” The U.S. PIRG Education Fund, a consumer advocacy group, also noted that Spirit was the most complained-about airline from 2009 through 2013, with roughly three times more complaints per 100,000 passengers than any other airline.
The company has actually embraced its image as the nation’s most hated airline. In Spirit’s “State of the Hate Report” published last summer, the company documented negative opinions among airline customers. Spirit seems to have tapped into a market of consumers who choose low price at the expense of service. Even Spirit’s NASDAQ ticker symbol, SAVE, evokes thriftiness. As spokesperson Paul Berry told 24/7 Wall St., “The one thing consumers tell us is most important is price. We compete on price.”
9. Wal-Mart Stores, Inc. (NYSE: WMT)
Few companies received a lower rating than Walmart for customer satisfaction, according to the ACSI. Walmart’s scores were low even relative to other discount and department stores, as well as relative to other supermarkets. Walmart was the worst performer in both industries.
Walmart is the largest private employer in America, with roughly 1.4 million associates just in the United States. It is also often cited as one of the largest companies paying front-line workers extremely low salaries. That may partially explain why the company received such low marks from employees on Glassdoor.com, just a 2.8 out of 5.
According to a 2014 report from Americans for Tax Fairness, the company’s low wages mean U.S. taxpayers must cover the cost of keeping its employees on social safety net programs such as food stamps and Medicaid.
In many ways, Wal-Mart controversies reveal the differing opinions many Americans have on a variety of issues. For example, Walmart sells products at low prices nationwide but is often accused of hurting local businesses where it builds stores.
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10. Comcast Corporation (NASDAQ: CMCSA)
Comcast received exceptionally low customer satisfaction scores for both its Internet and television services. Comcast’s scores in each category were so low that they actually stood out in their industries, which are among the worst for customer satisfaction according to the ACSI. The company also had the second worst customer service of any company in America, according to a survey from Zogby Analytics. A recording of a company customer service representative who refused to assist a customer in cancelling his service — and that went viral last year — is one indication of Comcast’s poor customer service.
Consumer outrage with Comcast extended beyond just dissatisfaction with its service. When the company announced early last year that it intended to merge with rival Time Warner Cable, consumers were angered at the prospect of even less competition in an industry that is already notoriously unfriendly to consumers.
Other industries have also been critical of the company’s operations as an Internet service provider (ISP). Notably, video streaming company Netflix has accused ISPs of deliberately slowing customers’ internet performance to extract fees from content providers.
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